Confidence among U.S. homebuilders improved in May for the first time in five months as buyers rush to take advantage of near record-low mortgage rates.
The National Association of Home Builders/Wells Fargo index of builder confidence rose to 44 from a revised 41 in April, the Washington-based group reported today. The median forecast in a Bloomberg survey called for an increase to 43. Readings below 50 mean more respondents said conditions were poor.
“Builders are noting an increased sense of urgency among potential buyers as a result of thinning inventories of homes for sale, continuing affordable mortgage rates and strengthening local economies,” said Rick Judson, chairman of the trade group and a builder from Charlotte, North Carolina. “This is definitely an encouraging sign.”
Low mortgage rates, a strengthening job market and limited inventories are benefiting builders including PulteGroup Inc. and Lennar Corp. as the housing market contributes to growth this year after emerging as a bright spot in 2012. Gains in housing will help the world’s largest economy move through a global slowdown that is hurting manufacturing.
Another report today showed industrial production declined in April by the most in eight months, reflecting broad-based cutbacks manufacturing that show factories will provide little support for the economy.
Stocks trimmed earlier losses after the builder confidence report. The Standard & Poor’s 500 Index fell less than 0.1% to 1,649.52 at 10:02 a.m. in New York. It closed at a record 1,650.34 yesterday.
Output at factories, mines and utilities fell a more-than- forecast 0.5% after a revised 0.3% gain in the prior month that was weaker than previously reported, a report from the Federal Reserve showed today in Washington. The median forecast in a Bloomberg survey called for a 0.2% decline. Manufacturing, which makes up 75% of total production, unexpectedly fell 0.4%, the third drop in four months.
All three components of the homebuilder survey showed improvement. The group’s gauge of the sales outlook for the next six months rose a point to 53, the highest reading since February 2007, from a revised 52.
Prospective buyer traffic also improved, to 33 in May from 30 in April. An index of current single-family home sales posted a four-point gain to 48 in May.